The fourth quarter is on the horizon. The economy is reopening and e-commerce still remains strong. For the trucking industry, being able to meet fourth-quarter demand to ensure a successful close-out to 2021, and to have enough revenue on-hand to roll out plans for growth in 2022, takes careful planning and it all starts with cash flow.
Moving Products Leading into the Fourth Quarter
Currently, shippers are getting large batches of products that need to be moved to stores and distributors all over the country. The outlook is such that, barring a setback from the COVID-19 Delta variant, people will once again do their shopping in person. The anticipation of high sales from the fourth quarter has retailers and warehouses ordering shipments to handle the seasonal rush. To match this, trucking companies need to boost cash flow in the third quarter so they can cover the costs associated with capacity demands, such as fuel costs, maintenance, and recruiting efforts.
Do Not Rule Out E-Commerce
E-commerce remains a driving force in the freight industry. During the pandemic, most consumers and businesses switched over to e-commerce, and most enjoyed the efficiency it offered. Many have not gone back to in-person commerce or shopping. Additionally, if there is a COVID spike in the country, expect e-commerce to once again be on top. Either way, the trucking industry is making preparations for spot loads by hiring new drivers, as well as adding owner-operators to their rosters. Some trucking companies need to add commercial vans to their fleets to offer that crucial last-mile transportation. New and small trucking companies should expect a big increase in business as well, because major carriers will be relying on them to cover areas they cannot reach. No matter what the conditions are, preparing for the fourth-quarter rush in e-commerce shipments will a strong and positive cash flow.
Recruiting Drivers Ahead of the Fourth Quarter
It is impossible to avoid headlines about the driver shortage in the trucking industry. This year’s fourth quarter is slated to place a big strain on the trucking industry as both capacity and LTL demands increase. Trucking fleets need ample capital on hand to cover recruitment efforts, offer incentives to new drivers, and improve driver retention. Expect a situation similar to 2017 and 2018, where demand was very high under the pretense of tariffs, only with an added layer of e-commerce. The demand for truck drivers is higher than anyone has seen in a few years, and trucking companies need to fill seats to keep shipments rolling.
Loans Are a Gamble
Trucking companies looking to take out loans to get capital ahead of the fourth quarter are taking a big risk. Banks and other lenders are fairly gun shy about approving loan requests, because they consider the current economic outlook to be uncertain. The economy is not out of the pandemic woods yet, and many businesses are still struggling. Loan turndowns are becoming more common, and lenders are requiring higher credit scores and collateral to qualify for loans, while providing lower amounts of capital than they did just five years ago. At the same time, many trucking companies do not want to take on debt ahead of the fourth quarter, because lowered credit scores and loan payments are not how they want to enter 2022, especially if they want to use the revenue for growth next year.
Boosting Cash Flow Ahead of the Fourth Quarter
For trucking companies to boost cash flow to be in a strong position ahead of the fourth quarter, they need to tackle unpaid receivables. Some trucking companies are still waiting on payments from jobs completed 30, 60, or even 90 days ago. To get access to that money now, trucking companies and owner-operators turn to freight bill factoring from Single Point Capital. Our freight bill factoring services do not place any debt on the books, and they do not lower your credit ratings. Perhaps the best part of freight bill factoring from Single Point Capital is our fast turnaround. We can factor your invoices and make funds available within a single day. Additionally, we offer a suite of tools to help you manage your account and keep track of payments, so you can automate your accounts receivable department.
With the fourth quarter approaching fast, wouldn’t you like to get a competitive edge to maximize your revenue and position yourself for growth in 2022? Contact the team at Single Point Capital today to get started.